3 What Is a CLEC? Competitive Local Exchange CarrierEssentially, a new local dial-tone providerA CLEC has the same rights & responsibilities as the ILEC (Incumbent Local Exchange Company)Important: becoming a CLEC enables a large retail customer to become a peer wholesale customerCopyright 1999 IF+E ( ) & ISG-Telecom ( )

4 Why Become a CLEC? CLEC's are peers of ILEC's, not just customersArbitration ability in front of Public Utility Commission and FCCInter-company reimbursements and settlementsAccess and reciprocal compensation revenuesOpportunity to build fiber networks on local rights of wayAbility to buy UNE (unbundled network elements) from ILEC at regulated low ratesAllows for more flexible set-up of services than regular customers of the ILEC can get via ILEC tariffed offeringsCopyright 1999 IF+E ( ) & ISG-Telecom ( )

5 Benefits of Being a CLECState by State mandated 13 to 25 percent below-tariff wholesale rates on circuits and services for switchless reseller CLECs;Greater discounts of 20 to 45 percent below- ILEC tariff retail rates on circuits and services for facility-based CLECs;Availability of carrier class services and UNE’s unavailable at retail levels;Most importantly, the ability to profit from the telecom services used by your existing customer base and community by taking on the billing and marketing functionsCopyright 1999 IF+E ( ) & ISG-Telecom ( )

6 CLEC Versus ILECUnlike ILEC's, CLEC's are not restricted to local and intraLATA businessCLEC's can offer long distance service bundled with local service and additional telecom servicesILEC's have years of cost studies posted with PUC/PSC to justify their high rates....now they can't lower them to compete with CLEC pricingCopyright 1999 IF+E ( ) & ISG-Telecom ( )

7 Why ISPs Should be a CLEC?The best news is ISPs are superbly positioned to move into the Competitive Local Exchange (CLEC) business. ISPs have a built-in customer base, particularly for data access which naturally leads to gleaning new revenues from the existing customer base by selling data circuits at retail while paying the wholesale rate and by adding voice services and features on a consolidated bill. Furthermore, additional and auxiliary services that the ISP can resell include long distance, conference calling, calling cards, and their own internet service, on a single bill broken out by customer identification codes and other management reports.Copyright 1999 IF+E ( ) & ISG-Telecom ( )

8 Why ISP’s are Positioned to be a CLECISPs have advantages in local, long distance, and data services through strategic alliances, bulk purchasing of long distance minutes, voice over IP deployment, consolidated billing, and the ability to deploy the latest in switching equipment without the expense of legacy equipment that the ILEC’s have that may not be able to deliver high speed digital services.Access to existing ILEC network at discounts on a pure resale basis as well as in converting their current circuits from retail pricing to wholesale pricing. ISPs can additionally configure their systems to deploy tandem switches in each LATA to gain free inbound T-1s from the ILEC while consolidating their modem pools at the tandem for cloud access. Virtual co-location is also available.No existing baggage and relatively low regulatory requirements compared to the ILECs’ regulated rate of return and cost study legacies for pricing.Information services for LAN/WAN customers including web page design and hosting, help desk services, configuration, and maintenance services for company internal communications systems.Copyright 1999 IF+E ( ) & ISG-Telecom ( )

11 Tandem Switch vs. Class 5 SwitchTandem Switch (class 4) Built for incoming/outgoing calls to a central point in the LATA for Data Carriers & Long Distance ILEC's must provide inbound trunking at no charge to the CLEC’s tandem switch with CLEC’s running return fiber to ILEC's tandemClass 5 Switch Built to handle all voice & dataModules available to partition switch into voice switch plus tandem ID Many CLEC's have one (1) main switch with small remotes in the COs ILEC's tend to have full class 5 switches in each COCopyright 1999 IF+E ( ) & ISG-Telecom ( )

15 Creating a CLECStep 1- Form (new) separate corporation - This prevents the co-mingling of regulated income from non-regulated income -Allows the ISP company to be first and largest customer of CLEC companyStep 2- Determine which types of services are to be offered; -Data only Long Distance, too? -Voice only Conference calling? -Voice & Data....Other telecom services?Copyright 1999 IF+E ( ) & ISG-Telecom ( )

17 Creating a CLECStep 5- Determine prior to tariff preparation if CLEC will be switchless or facilities basedStep 6- Prepare state's form for certification and file with state PUC/PSC either prior to sending or with the completed tariffStep 7- Negotiate or opt-in to an Interconnection Agreement - connects new CLEC's network & switch to ILEC's or other CLEC's, spells out how payments, trouble tickets, network alarms, etc. will be handled - sets rates for Resale or Unbundled Network Elements from ILECCopyright 1999 IF+E ( ) & ISG-Telecom ( )

18 Creating a CLECStep 8- For Non-Facilities Based (switchless) Resellers, a decision must be made as to whether to buy out of the wholesale tariff or negotiate a term and Volume Agreement with the ILEC’s and/or CLEC’sStep 9- If long distance is to be offered, carrier and rate must be establishedStep 10- If switchless reseller, procedures and training are establishedCopyright 1999 IF+E ( ) & ISG-Telecom ( )

23 Process TimingPhase I - Generally, Tariffs can be prepared and filed within 30 days from the time all corporate information is available. State PUC approval time varies from 1 day to 6 months.Phase II - The timing here varies tremendously depending on the equipment selection method and speed at which the ISP decides on the equipment type and vendor. Delivery time on switches varies from 1 month to 4 months depending on the complexity of the configuration. This can be done simultaneously with Phase I.Phase III - Again, this is done during the equipment selection and deployment process. When the switch is being set up, configuration tie in to various support vendors is established.Copyright 1999 IF+E ( ) & ISG-Telecom ( )

24 Conclusion Becoming a Switchless Reseller or a facilities-basedCLEC has many benefits - financially as well as toensure survivability in a very competitive market environment, it is not a simple process that can be done overnight.Financially, the best operational margins come from being afacilities-based CLEC, which can require a significant capital investment in a switch or tandem/voice switch. Fortunately, this investment is often more than covered by the savings gained from reduced ISP telecom costs.Copyright 1999 IF+E ( ) & ISG-Telecom ( )

About project

Feedback

To ensure the functioning of the site, we use cookies. We share information about your activities on the site with our partners and Google partners: social networks and companies engaged in advertising and web analytics. For more information, see the Privacy Policy and Google Privacy &amp Terms.
Your consent to our cookies if you continue to use this website.